WCRI – Time From First Injury To Workers Compensation Medical Treatment – Comparison Across 18 States

Most Workers Compensation medical treatment foretells how a claim will progress over its lifetime. One of My Six Keys To Saving on Workers Comp claims involves having a preset medical network in place.

The other likely involved key concerns the timely filing of the medical report.

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These two keys can easily escalate a claim to over 800% more than if the first report filing time – called employer reporting lag time– tallies in with a high number along with the medical treatment not being provided to the injured employee ASAP. The 800% figure came from my research into claims on two different public entity sets of files that involved over 10,000 claims.

WCRI (Workers Compensation Research Institute) attempted to answer three different questions. I was hoping the answers to these three questions would agree with my old research. Those three questions were:

How much variation was there across states in the time from injury to first treatment for physical medicine and “specialty” services (such as surgery, major radiology, and pain management injections) across injury types?

Were there consistent patterns in time to first medical treatment; that is, did some states show shorter or longer time to treatment across injuries and services?

How much variation was there across states in the time from injury to first treatment for “entry” services, such as emergency, office visits, and minor radiology?

The study’s data sets were:

The study examines claims with more than seven days of lost time for injuries occurring from October 1, 2014, through September 30, 2015, evaluated as of March 31, 2016. This would, in a way, eliminate medical only claims from the data set.

Two different reporters contacted me on my opinion of the study. One aspect that I had not read yet was that North Carolina was one of the lagging states in providing Workers Compensation medical treatment. (wow!) I decided to read more into the study.

Page 17 of the study (flash report) shows the average of all the states. The table (Table A-2) shows the comparison across all medical treatment types with the 18 studied states.

The states that were the slowest in providing medical treatment were (overall):

Massachusetts

North Carolina

Louisiana

California

I am not sure exactly what to draw from the study and flash report. California with its utilization review process would make the delays almost understandable. I am not so sure about the other three.

Our HQ state – North Carolina – surprised me quite a bit. North Carolina has employer-controlled worker compensation medical treatment. North Carolina did not place last or near the bottom in all of the study’s categories. I will likely need to read the study again to see if any hidden data nuggets exist in the workers compensation medical treatment data.

Workers Compensation Fee Schedules = Less Costly Claims and Premiums

Virtually all Workers Compensation Fee Schedules cut comp costs across the board. Check out this search for fee schedules articleson this website. WCRI just published a massive study on workers compensation fee schedules. The study covers 87% of the workers comp benefits paid in the US.

Public Use License Wikimedia Gnarlycraig

WCRI Says Freebies On This One

Dr. Rebecca Yang and Dr. Olesya Fomenko’s extremely comprehensive study covers 35 states. These two researchers are data geniuses along with all the staff at WCRI.

For many years (over 11) I have written numerous articles on fee schedules. Why?- because they are governmental interventions that usually totally works to reduce the cost to employers, carriers, and all other parties. Next week, I will cover the hidden side of fee schedules that are just as important.

Virginia just enacteda fee schedule. For some reason, I thought Virginia would never have a fee schedule. Some tweaks will likely be needed for their fee schedule.

From the WCRI press release and website:

The study, WCRI Medical Price Index for Workers’ Compensation, 10th Edition (MPI-WC), compares medical prices paid in 35 states and tracks price changes in most states over a 10-year span from 2008 to 2017 for professional services billed by physicians, physical therapists, and chiropractors. The medical services fall into eight groups: evaluation and management, physical medicine, surgery, major radiology, minor radiology, neurological testing, pain management injections, and emergency care.

One interesting development pointed out by WCRI is the following states had major fee schedule changes:

Arizona

California

Colorado

Illinois

Kentucky

Massachusetts

North Carolina

Texas.

The rating bureaus such as NCCI (most of nation) and WCIRB (California) both provided numerous articles on fee schedules reducing costs.

The following is a sample of the WCRI study’s findings: (directly from their website)

Prices paid for a similar set of professional services varied significantly across states, ranging from 26 percent below the 35-state median in Florida to 158 percent above the 35-state median in Wisconsin in 2017.

States with no fee schedules for professional services had higher prices paid compared with states with fee schedules—39 to 168 percent higher than the median of the study states with fee schedules in 2017.

Changes in prices paid for professional services exhibited variation across states, spanning between a 17 percent decrease in Illinois and a 39 percent increase in Wisconsin over the time period from 2008 to 2017.

Most states with no fee schedules experienced faster growth in prices paid for professional services compared with states with fee schedules—the median growth rate among the non-fee schedule states was 30 percent from 2008 to 2017, compared with the median growth rate of 6 percent among the fee schedule states.

I think we can draw a direct conclusion from the studies by NCCI, WCIRB, and especially WCRI. States can only help themselves by enacting and properly adjusting their workers compensation fee schedules.

June 21st – WCRI Webinar on Opioids vs. Length of Temporary Total Disability

An upcoming WCRI Webinar on how opioids affect the TTD period looks to be one that is worth your time and a small stipend. WCRI is the acronym for Workers Compensation Research Institute out of Boston MA.

Copyright – CDC – Public Release

This webinar is one that I will be listening in of for sure. The long overused term opioids usually makes me want to not pay attention to the article or presentation. I have now read articles and attended so many webinars on opioids over the past five years. It is a term that has become tiring.

Exception – This webinar Why? – Because of the breadth and depth of the study.

Dr. Bogdan Savych will host the 1/2 hour webinar on June 21st at 1 PM Eastern Time. Dr. Savych led the study on post-accident opinions of employees on their Workers Compensation claims<<ground-breaking study>>. I compliment him on that study every time at their Annual Conference.

Adjusters and claims staffs should get a copy of that study. The numbers and opinions can likely help you with your injured workers.

Who – Out Front Ideas – with Kimberly and Mark (Freebies)

The webinar ranks as the most popular every year the webinars have been in existence Kimberly George and Mark Walls will be discussing the latest workers’ compensation trends, concerns and emerging issues. Many of the issues they discuss will be developed into individual, more-detailed webinars later in 2018. You can also make suggestions for upcoming webinar topics. I just now signed up for this one.

Who- Workers Comp Research Institute (WCRI)

Fee schedules have always been one of my favorite Risk Management techniques that state legislatures can enact. There are many articles on the subject of fee schedules in this blog. (Click here for a blog search.)

When J&L Risk Management Consultants analyzes claim values, the short term effect of hospital charges can heavily impact claim values in the very early stages of a WC claim.

The before and after effects should be beyond interesting for claims payors, adjusters, network administrators, and basically anyone that is involved with Workers Compensation. My estimation is the medical costs dropped while not resulting in a level of care reduction.

Questions addressed:

What was the hospital reimbursement policy change made in each state?

How did the changes to hospital reimbursement impact costs and cost growth?

Were there any unanticipated consequences from these reimbursement changes?

Carol Telles, Senior Analyst will be presenting the factual results.

From the WCRI website:

Ms. Telles will be sharing findings from WCRI’s CompScope™ Medical Benchmarks, 17th Edition, which examined the costs, prices, and utilization of workers’ compensation medical care in 18 states through March 2016 for injuries occurring mainly in 2010 to 2015.

WCRI is charging a nominal fee for non-members. Register here.

A great bonus is WCRI will provide a copy of the slides presented.

As always, any interesting webinars of note will be mentioned in an article. If you or your organization is presenting any informative webinars that are free or charge a nominal fee, please forward the information. We will try to fit it in our postings. Thanks.

The January 2018 Workers Comp Webinars schedule starts off with two great ones.

NCCI Workers Comp Statistic

The Combined Ratio performed even better than last year in the overall market. Last year the ratio pegged at 94%. What does this mean? The formula consists of three main variables:

Losses + Expenses / Earned Premium

The current workers comp statistic – Combined Ratio came in at 85% this year. The Combined Ratio measures a market’s total efficiency. Investment income by carriers is not counted in the Combined Ratio.

According to NCCI,, this was the best Combined Ratio in 50 years. Does this mean that carriers are making a 15% profit off all written premium – not exactly, but the more the number decreases, the healthier the market becomes overall.

I marked a few more pages in the presentation. (You may want to download the PDF from the first link in this article.) They were:

Slide 20 – Changes in Medical Lost-Time – Claim Severity by Component. The utilization number has decreased to an almost no growth figure compared to 20 years ago.

Slide 32 – All states are reducing Loss Costs except Virginia Hawaii and South Carolina

Slide 33 – North Carolina North Carolina reduced Loss Cost on 4/1/17 by –14.4% which was the largest reduction in the US.

Free WCRI Webinar Explores Injured Workers Post Accident – 08/09/17

The free WCRI Webinar on August 9th should be an interesting one. The WCRI hails from Boston – Workers Comp Research Institute. I learned about this study while live blogging the 2015 WCRI Annual Conference in Boston.

If you have anything to do with Workers Comp, this should be well worth your time. Knowing what employees think of the claims process should be very insightful.

Dr. Bogdan Savych’s research is groundbreaking. No organization had really ever followed the outcomes of employees after their recovery period and the Workers Comp file closes. One had to wonder what happened to injured employees after the claims was over or was far along in its development.

The research, Comparing Outcomes for Injured Workers, 2016 Interviews, is a product of an ongoing, multiyear effort by WCRI to collect and examine data on the outcomes achieved by injured workers in a growing number of states. Interviews were conducted in six of the states (Indiana, Massachusetts, Michigan, North Carolina, Virginia, and Wisconsin) in 2016. Interviews for all other states (Arkansas, Connecticut, Florida, Georgia, Iowa, Kentucky, Minnesota, Pennsylvania, and Tennessee) were conducted from 2013 to 2015.

Questions addressed:

In what states did injured workers report higher rates of return to work?

How did recovery of physical health and functioning vary across study states?

WCRI Study Physician Dispensed Meds

The controversial physician dispensed meds subject pops up often at the workers comp claims department “water cooler” discussions. The cost and pre-certified authority to dispense seems to bristle against many adjusters. How do I know this? Whenever I bring up the subject, many become very concerned even with the “new reforms”.

(c) US Drug Enforcement Agency

Many adjusters feel the physicians worked their way around the new reform systems.

A new WCRI (Workers Comp Research Institute out of Boston) study showed that many states still struggle today with the subject. According to WCRI :

The study, A Multi-state Perspective on Physician Dispensing, 2011–2014, found physicians dispensed fewer prescriptions after price-focused physician dispensing reforms. However, as of 2014, physician dispensing was still common and represented a large share of prescription costs in several states, including California, Florida, Illinois, Maryland, and Pennsylvania.

One asks themselves why did California, Florida, Illinois, Maryland, and Pennsylvania still have so many problems with physician dispensed meds? WCRI had an answer:

According to the study, the reforms reduced prices for existing drug products, which was evident in all post-reform states. However, physician prices increased for several drugs commonly used to treat injured workers in several post-reform states, including California, Florida, and Illinois. The increase in physician prices in these states was a result of frequent physician dispensing of higher-priced new drug products. When dispensing these new drug products, some physician-dispensers were able to bypass the reimbursement rules, which target physician-dispensed repackaged drugs, and were paid much higher prices than they were paid for existing strengths of the same drug. The results raise questions about the effectiveness and sustainability of the price-focused reforms in these states.

Dr. John Ruser, WCRI Executive Director and CEO used a phrase in the article that encompasses the problem in a few words:

“With any reform, stakeholders want to know if the desired outcome was achieved. This study answers the most important questions policymakers and other system stakeholders have with regard to these state reforms, including did they work as intended or have they led to unintended consequences?”

Many times a state steps into assist in bring one workers comp aspect or another under control. Sometimes the law of unintended consequences (aka Murphy’s Law) rears its ugly head for all to see.

Once could say that the State Legislatures took the previous WCRI and the Rating Bureau studies on physician dispensed meds and attempted to fix the situation.

The study covered a massive amount of data that makes it one of the largest I have seen by WCRI:

The data used for this report came from payors that represented 36–68 percent of all medical claims across 26 states. The states included in this study are Arkansas, California, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and Wisconsin. The detailed prescription data cover service years from 2011 through 2014, for all medical claims with 24 months of experience.

The bottom line – Do those Legislatures need to go back to the drawing board or do they need to just fine tune what they have in place? The state reform problems often go beyond just physician dispensed meds.

The Workers Comp Attorney involvement rates vary wildly between the states that WCRI studied in a recently released report. This topic wowed the press and audience at the recent WCRI Annual Conference just this last March. The press at the conference began feverishly typing when this data was presented by WCRI.

WCRI is the Workers Compensation Research Institute out of Boston, Mass. Andy and the Institute represent a great think tank for Workers Compensation. When I need good fresh WC data, I turn to them. The rating bureaus such as NCCI and WCIRB provide good data also.

If you underwrite, adjust, or have anything to do with the Workers Comp rating process, this is one study you should download. The data astounded me.

The chart in this article shows the striking differences between the 18 states in reference to attorney involvement.

According to WCRI

“According to the study, the percentage of claims with worker attorneys ranged from 13–14 percent in Wisconsin and Texas to 49–52 percent in New Jersey and Illinois, for 2013 claims with more than seven days of lost time and experience through March 2016. The median of the 18 states was at nearly 30 percent.

The question that I ponder covers three points – why

Such a huge variation

Do over 50% of files in either Illinois or New Jersey require an attorney? – astounding

Is the median of all states at 30%?

WCRI postulates an answer for all three:

The study, Worker Attorney Involvement: A New Measure, indicates system features may be responsible for at least some of the interstate variation. The report focuses on the two states among the lowest on this measure (Wisconsin and Texas) and the two states among the highest (Illinois and New Jersey), and discusses the system features that may be contributing to these states’ results based on findings from WCRI’s CompScope™ Benchmarks studies.

The 18 states included in this study are Arkansas, California, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Massachusetts, Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, Texas, Virginia, and Wisconsin. These states were selected because they are geographically diverse, represent a range of system features, and represent the range of states that are higher, near the middle, and lower on costs per claim.

The analysis in this report uses data from 24 data sources, including national and regional insurers, claims administration organizations, state funds, and self-insured employers. The data are collected in the WCRI Detailed Benchmark/Evaluation (DBE) database, which includes about 7.5 million claims that are reasonably representative of the entire system in each of the 18 states, including all market segments: self-insurance, residual market, voluntary insurance, and state funds.

BTW, WCRI does not pay J&L Risk Management Consultants or myself any advertising revenue. My opinions on their studies are written of my own volition. They do provide me a copy of certain studies gratis if I request them.

WCRI CompScope Released Today – Updates 18 States

The WCRI CompScope released today is an update for all the 18 states of the study. I have used this study often for research that goes beyond the Rating Bureaus. This release is basically an update for all the states in the CompScope Study.

There are individual reports for every state except Arkansas and Iowa. I am unsure why those two states do not have individual reports.

The ones that interest me the most are California, Michigan, Minnesota, North Carolina, and Texas. Those are personal preferences of mine.

The studies examine trends in workers’ compensation medical and indemnity payments in a number of states with significant changes, either through new laws or through court rulings. They also examine how income benefits, medical payments, duration of disability, litigiousness, and benefit delivery expenses changed over time, and they compare how these measures differ from state to state.

If you perform any research or are involved with any of these states’ Workers Compensation system, you may want to give the studies a try.

I have used them for 20 years. I have extrapolated their data to provide additional statistical analyses beyond these studies.

State Workers Comp Administrators

The Industrial Commission’s website administrator Robert McDowell does a great job of keeping the list up-to-date. In fact, the list was updated only two weeks ago. I have used this list for many years as a quick reference.

You may want to bookmark that website for a return trip or two when you need to know the jurisdiction’s contact very quickly. The list is free to use.

You can always go a Google or DuckDuckGo web search to find information beyond just the state Workers Comp administrator’s list. DuckDuckGo is a powerful web search provider that does not track your searches.

The US Dept of Labor also has a list of State Workers Comp officials which has a clickable map. The site is not as comprehensive as the North Carolina Industrial Commission website. The clickable map is nice as a fast way to get to the agencies’ website info and telephone numbers.

The two websites mentioned earlier in this article are the ones that I have used over the past 10 years or more

Employee Misclassification Different

North Carolina Will Likely Soon Enact Employee Misclassification Bill

Classification codes are not the same as what North Carolina is looking to reign in concerning unscrupulous employers. We begin to receive questions when the subject of employee misclassification hits the Workers Comp newswires.

North Carolina will very likely enact a law on employee misclassification. However, this does not mean that a company cannot question or dispute the classification codes on their policy, premium audit, or bill.

The misclassification referred to in this case is classifying employees as subcontractors or employees. North Carolina has had a recent history of allowing 30,000+ companies to not have WC insurance or classifying all employees as subcontractors.

This caused quite a stink when an employee had a claim but was then denied benefits as they were non-insured subcontractors. One has to wonder how many North Carolina companies still have no WC coverage.

We would have never found out about the 30,000+ uninsured companies if a dutiful newspaper reporter simply compared a few databases that were publicly available.

Even classifying contractors properly is now and will still be permitted even after the upcoming law likely comes into effect this summer. The IRS guidelines provide an overall rule of thumb, but are not state-specific.

Workers compensation classification codes are usually settled at premium audit time. However, adding new classification codes at audit is one of the Ten Red Flags of Workers Comp Policies and Audits.

There is a caveat here. One has to be careful when preparing for a premium audit. This South Carolina company was prosecuted along with an “audit preparation consultant“ for misrepresenting employee classifications to their WC carrier before the premium audit.

If this seems confusing drop me an email or call me. The bottom line is whatever law North Carolina or any other state enacts does not preclude your company from questioning or disputing your Workers Comp policies, audits, or billings. That is just good business sense as you should pay every penny you owe in Workers Comp, but not one cent extra.

Upcoming WCRI Teleconference

The upcoming WCRI teleconference on predicting WC outcomes.WCRI (Workers Compensation Research Institute) has scheduled a one-hour webinar on Thursday, October 16, 2014 at 2 p.m. ET (1 p.m. CT, 12 p.m. MT, and 11 a.m. PT) to discuss this new research. The cost of the seminar is only $79 for non-members.

This is a rare opportunity to see statistics from the “other side of the table.” as the data was compiled directly from the injured workers. I will be listening on this one as we have many clients in the states WCRI will be covering on the 16th. Some of the areas that WCRI will cover are:

Why was trust one of the more important predictors of worker outcomes?

What role did comorbid medical conditions have on an injured workers ability to return to work?

How do things like severity and type of injury as well as other characteristics (age, sex, education, language, marital status and job history) impact worker outcomes?

Do labor market conditions, such as local urbanization and the unemployment rate, have an impact?

WCRI is the only research provider of Workers Comp that actually performs studies by directly contacting the injured employees. The studies are based on telephone interviews with 3,200 injured workers across eight states:

Indiana

Massachusetts

Michigan

Minnesota

North Carolina

Pennsylvania

Virginia

Wisconsin.

The studies interviewed workers who suffered a work place injury in 2010 and spent at least 7 days away from work. The surveys were conducted during February through June 2013—on average, about three years after these workers sustained their injuries.I attended WCRI’s March 2013 annual conference where the speakers covered the same subject. The presentation was very interesting. For more information or to register go to the teleconference page.

Concierge Medical Consultants – A Great WC Medical Conference

The details and registration can be found here or check out the details below. You can even email in questions to the panel for April 1st.

Lead Author of the ODG Pain Management Guidelines

& Dr. William Nemeth, MD, Addictionologist

Join us for Mastering the Medical Portion of the Case, a comprehensive program comprised of medical experts and legal experts who will inform the audience of how to best prepare for the medical portion of complex cases/claims involving pain management issues. Physicians will discuss current evidence based guidelines speaking in detail on opioids, injections, psychiatric comorbidity, functional restoration programs and diversion. Participants will gain a legal perspective from attorneys on both the plaintiff and defense side of how they use different types of medical experts to prepare their cases and how they deal with these complex cases/claims.

Life care planning and medical cost projections will be explored as we talk about how to determine the future medical exposure of a case/claim. A licensed underwriter will discuss rated ages. The Medicare Secondary Payer Act, particularly the SMART Act will be discussed and satisfying Medicare, both the liens and future medicals will be explored. Finally, a Medicare Secondary Payer legal update will be provided.

Ethics In Workers Compensation Claims – Does It Exist?

Ethics in the Workers Compensation claims arena has increased over the years. Last week, I had the privilege of attending the 3rd Quarterly Meeting of NC PRIMA in Winston-Salem, NC. If you are in the public risk sector in North Carolina, you are definitely missing out by not being a member. The other PRIMA chapters can be found here.

The law offices of Cranfill, Sumner and Hartzog (CSH) presented at the meeting. The topic was Ethics in Workers Compensation. Overall, the presentations were very informative. CSH is one of the premiere Workers Comp defense firms in North Carolina.

Over the weekend, I read some type of innocuous article on the 80-20 rule as it applies in science experiments. I then thought that the 80-20 rule does apply to Workers Compensation ethics.

In most of my career in insurance, I have always noticed that 80% of the Workers Compensation personnel are trustworthy, forthright, and very ethical. The other 20% are another matter. I would never say the other 20% are unethical all of the time. The phrase “hit and miss” would apply in these cases.

The 20% to which I am referring are not unethical ALL of the time. I will coin the term spot-ethics or almost always ethical except in certain instances. The spot-ethics are sometimes fostered by the TPA (Third Party Administrator) or insurance company office.

Some of the questions that ran through my mind after the CSH presentation were:
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Should an adjuster deny a claim just to settle the file for a cheaper amount later than paying all benefits upfront?

Should adjusters alter forms that were signed by the injured employee just to make sure they will be approved by the WC regulatory board or commission as long as they do not affect the amount of benefits payable?

Does the adjuster use the same guide each time when taking recorded statements?

If an adjuster skips a check by mistake, should they blame the mail, and then issue a check that was never issued in the first place?

Should the oldest medical bills be paid first and not on an ad-hoc basis?

Is the file documented with clear concise notes that are not handwritten?

Is over-reserving or under-reserving a file unethical?

Is an adjuster considered unethical if they accidentally make a mistake?

After pondering whether or not most claims personnel are ethical, I would have to say that the 20% was somewhat extreme. My assessment is that 5% of claims personnel are unethical at some point in their career. This does not mean they are unethical from day one. Are the questions I posed really a question of ethics? Some of them are – others are not.

CSH had a great list of ethical considerations for adjusters and risk managers that apply to any state:

Encourage prompt reporting of injuries

Act with a sense of urgency

Complete a prompt and thorough investigation

Have a legitimate and arguable basis for any denial

Competent and objective professionalism

Document notes completely and objectively

Authorize medical treatment timely

This was a partial list. If you want to read further on my opinion of the job of Workers Comp adjusting, check out my articles on Workers Comp ethics and adjusters.

NCCI NC Rate Bureau Changes – Upcoming Presentation

A NCCI NC Rate Bureau changes presentation will be presented by James J Moore this month. .I will be presenting on the new NCCI or NC Rate Bureau Mod Calculation changes later this month at Job Ready Services in Raleigh. You can register here

April Lunch & Learn:

Wednesday, April 24, 2013

12:00pm-1:00pm

Topic: E-Mod Rate Changes: How to Reduce Worker’s Comp Premiums

Speaker: James Moore, JL Risk Management Consultants, Inc.

Cost: $10.00

With the new NCCI NC Rate Bureau E-Mod changes effective 4/1/13 in North Carolina, smaller claims are now more expensive than ever. The rules have changed dramatically on how each employer is charged for their Workers Compensation claims. Large deductible or self-insured employers will also feel the effects of these changes.

A brief overview of the new changes will be covered along with post -accident Risk Management techniques. The methods for lessening the effect of these changes will be covered along with other services such as rehabilitation nurses’ involvement, employer guidelines, and work conditioning/industrial rehab services.

I will also present on how to best handle these new developments including how to prevent these changes from increasing workers compensation premiums.

Term Of The Day – Wage Statement

A wage statement is a necessary yet tedious part of paying a WC claim properly. The injured employee’s compensation rate is based on this integral part of processing a WC claim.

It is usually filed by the employer. Each state has its own wage statement. They range from very complicated to complete to very easy. Most wage statements cover a period of 13, 26, or 52 weeks prior to the employee’s date of injury.

One of the most time consuming yet confusing part of a claims adjuster’s is to value the wage statement to pay Workers Compensation benefits. North Carolina always seems to calculate a different wage than what the adjuster has deciphered as the Workers Compensation TTD rate.

The adjuster has to often use the rate from the First Report of Injury to initially pay the injured worker if they are still out of work. New Hampshire always seemed to have an easier one to use. Thankfully, there are now many software packages that will calculate the proper WC rate using the filed wage history by the employer. An adjuster will sometimes have to makeup the difference if the initial WC rate (usually TTD) is too low.

Almost all states now require a filed wage statement in place within a certain time period.

Term Of The Day – Records Retention

The length of time that closed Workers Compensation claims file material should be retained by the insurance carrier, employer or TPA. Most states have a minimum records retention law such as seven years after the file is closed. I do not recommend ever destroying file material at any time.

There are a few instances of a State Supreme Court decision or new legislation being passed that changes the Workers Comp playing field. For instance, in North Carolina, all medical treatment cases were allowed to be reopened by the claimant. Employers, insurance carriers and TPA’s were scrambling to recreate the files that were older than 10 years. With the scanning capabilities of today’s computer systems, there is no need to destroy an insurance document of any type.

One can buy a scanner for little to nothing that scan thousands of pages an hour. Destroying the paper files may be applicable. Destroying the electronic copies really makes no sense with today’s technologies in place. You can store or backup hundreds of thousands of pages on a thumbdrive to enhance records retention.

North Dakota WSI Claims Final Five Questions

The Answers to the Final Five Questions on the Last Blog with One More Question added:

6. We could not file a dispute with the North Dakota government or WSI, as the dispute had to be filed BEFORE the end of the bidding. We would have filed a dispute for the small number of files that the provider examined in their review vs. cost, but the number of files reviewed were not published until AFTER the audit was completed.

7. A recent North Carolina public bid for a file review of 350 files had a range of $27,000 to $65,000. So with 475 files, that would be 475/350 * 65,000 = $88,214 maximum.

8. Yes, we are familiar with the audit provider. They are one of the larger companies that bid on quite a number of projects.

9. We know no one at the WSI or within the North Dakota state government.

10. Yes, we do realize that we were posted on some of the politically-based websites in North Dakota. We made no effort to contact anyone with the North Dakota press. We have heard from a few news outlets and have been interviewed on the blog postings.

11. This is another question that we just added – Did I review the report from the provider on WSI’s website? What was my opinion of the report?

The report was well done from a structure standpoint. However, the numbers are not there to draw any conclusions. One area that was remarkable was that the provider’s team could have performed an audit on 475 files from 1/28/08 through 2/1/08. That is five workdays or 37.5 hours. The norm is one file per hour on the average. Lost-time files may take longer than one hour to review, but medical-benefit-only files brings the average back to within an hour. That would be 12.67 files per hour. The review team would have needed to consist of 13 auditors at a minimum to accomplish this task that quickly.

Workers Comp Captives – IRS Mulling Changes

The Workers Comp Captives are the IRS news today. The blog post today was supposed to be about Searching for Workers Comp terms in Google and the mistakes that are made in the Work Comp searches.

We will get back to that tomorrow as there was a bit of interesting news today from the IRS about the use of Captives. I have been through a few Captive training courses that left me asking the question – How can a captive count as Workers Compensation insurance? The IRS is back to contemplating about insureds not paying a tax on the reserves that are held for Workers Compensation expenditures.

For quite some time, companies that were insured through captives did not pay any tax on the reserve amounts. The IRS may one day rule that the reserves are taxable. In fact, there is an article out now saying that this may be the case. The situation will need to be monitored very closely in the next few years.

My understanding is that offshore captives would still not be taxable, as the IRS would have no jurisdiction over any offshore Work Comp captives. This would be very harmful to the domestic captive business, as the reserves remaining non-taxable is one of the greatest benefits of being in a captive. Vermont would be heavily affected.

The following 28 31 states allow Workers Comp captives:

Alabama

Arizona

Arkansas

Colorado

Connecticut

Delaware

District of Columbia

Florida

Georgia

Hawaii

Illinois

Kansas

Kentucky

Maine

Missouri

Montana

Nevada

New York

North Carolina

Ohio

Oklahoma

Puerto Rico

Rhode Island

South Carolina

South Dakota

Tennessee

Texas

Utah

Vermont

Virginia

West Virginia

Not all of the 31 states have Work Comp captives operating in them yet.

Next up – Searching for Workers Comp terms in Google and the mistakes that are made in the Work Comp searches

West Virginia Workers Compensation Conference Advisory Rates

From what I could tell, the Old Fund did not keep records that were directly usable by NCCI, so NCCI took 7 states that were similar to WV (not including coal mines) and used them to come up with the advisory rates. The states were:
a. AL
b. KY
c. MD
d. NC
e. SC
f. TN
g. VA

It will be six years before NCCI has data they can fully use to calculate advisory rates.

The Supreme Court decision Mandible(?) – where the employee can sue outside of WC under Part B of the insurance policy if the employer intentionally harms the employee. This was a large concern to the carriers as the WV Supreme Court had been very liberal with the “intentional harm” part of the Mandible(?) decision. Part B allows an employee to sue the employer/carrier in a manner very similar to a regular insurance claim with no limits. The WV DOI people there had differing opinions whether this was excluded from a WC policy or not. If this is not excluded, some carriers may not come into the state on 7/1/08.

The PEO’s that may come into the state was of a concern to me. As so many of them are not doing well or have been brought up on charges of corruption, the regulations need to be tightened as much as possible. PEO’s can usually offer discounted rates, but at what final cost if they are allowed to operate as freely as has been the case in many other states?

Overall, the WV Department of Insurance and NCCI did a great job, as they are in a very difficult position with West Virginia not ever having an open market for Workers’ Comp.

Tuesday, September 11, I will be speaking at the North Carolina Mid State Safety Council lunch meeting. The title of my presentation is “The Five ASAP Ways To Cut Your Workers Compensation Claims.”

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About Me

James J Moore
Raleigh, NC, United States

James founded a Workers' Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L's mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers' Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James's educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.